...,_ ~-----~ ~- State of Minnesota. Report to the Minnesota Legislature

Transcription

1 ...,_ ~-----~ ~- State of Minnesota Report to the Minnesota Legislature February 2, 2005

2 ho are the Minnesota Public Utility Commissioners? LeRoy Koppendrayer Chairman 1111 Republican Vermillion State Junior College; Course work at Anoka Vocational Technical Institute; Dunwoody Institute, Minneapolis; 1990 elected to Minnesota State Legislature and served through 1998; served as Assistant House Minority Leader and House Republican Whip; self-employed international agriculture consultant, lived in Indonesia for three years, also worked in South America, Africa, Jamaica, Phillippines and former U.S.S.R. Countries; dairy farmer; manager, Fingerhut Corp. in Princeton, Alexandria, Sauk Center and Mora, MN; heavy equipment operator, truck driver, Reserve Mining Company; currently serves on NARUC Committee on Electricity, NARUC Regulatory Advisory Committee to the Institute of Public Utilities; chairs the NARUC Subcommittee on Strategic Issues and is a liaison on the NARUC International Relations Committee; also serves on Minnesotans for School Choice. Appointed Commissioner by Governor Carlson, January 6, 1998; appointed Chair by Governor Pawlenty, January 6, 2003; reappointed Commissioner and Chair by Governor Pawlenty, January 26, 2004; term expires January 4, Phyllis A. Reha Vice Chair Democrat University of Minnesota, B.A.; University of Minnesota Law School, J.D.; Administrative Law Judge, Minnesota Office of Administrative Hearings where she specialized in public utility, telecommunications and environmental regulation ( ); Assistant Professor, Hamline University Graduate School of Public Administration and Management ( ); Free Lance Mediator and Arbitrator specializing in employment contract and discrimination disputes (1987-Present); currently serves on the NARUC Energy Resources & Environment Committee and is the Chair of the Renewable Resources and Distributed Generation Subcommittee; currently serves on the Steering Committee of the National Council on Electricity Policy; Member of the National Wind Coordinating Committee; and, Member of the EPRI Advisory Council. Appointed Commissioner by Governor Ventura, May 16, 2001; term expires January 1,

3 R. Marshall Johnson Commissioner 11 Independent Duke University, Duke in Brazil Summer Program, 1987; University of Minnesota, B.A.; CEO and Chair of Anchor Gas and Fuel, Inc., and Anchor Transport, Inc.; NARUC Gas Committee; Gas Research Institute (GRI). Appointed Commissioner by Governor Carlson, August 11, 1993; reappointed by Governor Carlson, December 11, 1995; reappointed by Governor Ventura, June 7, 2002; term expires January7, Ken Nickolai Commissioner 11 (No Political Affiliation) Carthage College, B.A.; Duke University School of Law, J.D.; Kennedy School of Government, Master of Public Administration; Chief Administrative Law Judge, Office of Administrative Hearings; Deputy Commissioner, Minnesota Department of Human Rights; Director of Policy and Legal Affairs, Minnesota Department of Human Rights; Attorney, Minnesota Center for Environmental Advocacy; Consultant, Governor's Commission on Reform and Efficiency (CORE); Assistant Regional Counsel, U.S. Environmental Protection Agency. Appointed Commissioner by Governor Pawlenty, September 9, 2003; term expires January 5, Thomas Pugh Commissioner 11 Democrat Dartmouth College, A.B., cum laude; University of Minnesota J.D., cum laude; Attorney in private law practice, Thuet, Pugh, Rogosheske, and Atkins, ; Member of the Minnesota House of Representatives, District 39A including West St. Paul, Mendota Heights, South St. Paul Mendota, Lilydale, and Eagan, ; Minnesota House Minority (DFL) Leader, Author of many bills relating to our justice system and member of nearly every crime bill conference committee in the 199o's. Member of the Minnesota State Bar Association, Dakota County Bar Association. Frequent speaker on legislative process. Member, NARUC Committee on Telecommunications. Appointed Commissioner, September 1, 2004; reappointed January 3, 2005; term expires January 3, 201L 2

4 What; Does t;he PUC Do? The Minnesota Public Utilities Commission (PUC) regulates three cornerstone service industries in Minnesota's economy, i.e., electricity, natural gas, and telephone. It is the Commission's responsibility to ensure that vendors of these services provide safe, adequate, and reliable service at fair, reasonable rates (M.S. Chapters 216A, 216B and 237). Key Services I Disciplined decision-making for adjudicating party-to-party disputes and establishing broad industry rules and policies I A public forum for examination of policies pertaining to regulated industries I Mediation of consumer complaints concerning services of telephone or energy utility providers Broad Policy Object;ives I Guiding the transition to effective competition in telecommunications markets I Assuring safe and reliable gas and electric services at reasonable rates Commission's Uniqpe Role and St;ruct;ure The Commission is somewhat unique because its statutory responsibilities involve elements of all three branches of government. In resolving specific party-to-party disputes, the Commission acts like a court (quasi-judicial function; M.S. 216A.02, Subd 4). In setting broad industry policies through investigations or rule-making, the Commission is a policy-making, or legislative body (legislative function; M.S. 216A.02, Subd 2). In executing statutes and rules, the Commission is an administrative body (administrative function; M.S. 216A.02, Subd 3). In addition, the Commission is deliberately structured to have a significant degree of independent decision-making autonomy. Minnesota statutes require a Code of Conduct. The tone of that Code is reflected in the following phrase: Commissioners shall not be swayed by partisan interests,.public clamor, or fear of criticism. There are some additional noteworthy factors that preserve the integrity of the Commission's decision-making process: I The Commission's Standards of Conduct (Rules of Minnesota, Chapter 7845) include specific restrictions on employment, investments and gifts, as well as prohibitions regarding ex parte communications and conflicts of interest. I Commissioners are appointed by the Governor with the advice and consent of the Senate for six year staggered terms; no more than three of the members can be from any political party; commissioners must satisfy certain requirements relating to professional background and residency; and can be removed only upon a showing of cause. I All decisions relating to docketed matters must be made on the basis of record evidence and must be made in an open meeting. I All decisions relating to docketed matters are recorded in written orders which must incorporate the rationale for the decision and are subject to appeal. 3

5 t History Snapshot; The Minnesota Public Utilities Commission's predecessor agency was the Railroad Commission which was established in Over the years the name was changed to the Railroad and Warehouse Commission, the Public Service Commission, and ultimately, the Public Utilities Commission. During this period, the agency's authority has included setting rates and terms of service for railroads, trucks and buses, warehouses, grain elevators, weights and measures, telephone and telegraph, and electric and natural gas utilities. In addition to its date of creation in 1871, there are several other key dates to note in reviewing PUC history: l91sminnesota telepl)one companies are ploce~dunde(state regulation.... ~ ~ '. :: lnvestor-owned gas and electric companiesare pla~d under state.. regulation Administrative separation of Public ServiceCommis~ion into Department of Public Service and Public Utilities Commission. The separation created clear demarcation between the advisory and advocacy roles of professional staff PUC given authority of Certificate of Need approval _process for large energy facilities. In the some year, the PUC's authority over railroad, bus and truck rotes was transferred to the newly created Transportation Regulation Boord. Today the PUC has authority to set rates and terms of service for gas, electric and telephone utilities operating in Minnesota, as well as mediate and otherwise resolve disputes between utility service providers and consumers. 4

6 Quick Overview of Operat;ions Number of Filings: During 2004, the Commission received approximately 2073 formal filings involving telephone or energy utility matters. This level of filings sustains a trend which began in the late 1990s. As in years past, the volume of telephone filings exceeded energy. Number of Filings [ soo r- t --. L-- L-- ~ ' : I - - I. j : j f -- I '95 '96 '97 '98 '99 '00 'O 1 '02 '03 '04 B Total Energy Telephone Decision-making: During 2004 the Commission convened 78 meetings (43 for docketed filings; 35 planning meetings) and issued 809 orders. Of the 2100 total filings for 2004, 222 involved complex or unique new issues or disputed formal petitions, up from 201 such cases during These cases were more complex and absorbed most of the Commission's attention. These numbers translate to approximately s of these complex cases per agenda meeting. Of the 222 complex cases, 109 were telephone dockets and 113 were energy dockets. Therefore, although the number of telephone filings exceeded energy in 2004, the cases that commanded the vast majority of the time for the Commission and staff were nearly equally divided between the telephone and energy areas. The vast majority of filings coming to the Commission are dealt with in days. This amount of time reflects the minimum needed to satisfy basic due process requirements under Minnesota law. While the complex cases mentioned above can take more time, many are resolved in a matter of months. Use of an expedited approval process has minimized resolution time for more routine cases. A total of 471 items were resolved using this alternative process. Consumer Affairs: The Consumer Affairs Office received 13,000 calls during Despite this high level of call traffic, continuing efforts in consumer education have kept the number of actual complaints lower for the second straight year. Also, continuing efforts to utilize telecommunications and computer technology has enabled the Office to efficiently manage its substantial workload despite a reduction in human resources Calls & Complaints # Complaints #Calls 5

7 Budget: Despite a consistently high level of activity, the Commission's operating budget has been stable over the last several years, showing a very gradual increase. Approximately 97% of the Commission's expenditures are recouped for the General Fund through the Commission's assessment authority. 10, ! a-t- --- Biennial Appropriations '94-95 '96-97 '98-99 ' ' '04-05 Annual Appropriations (OOOs) Staff Size: The Commission's budget size and staff size both are well below the average for state utility regulatory 60 commissions. A 2003 study by the Michigan Public Utilities 50 Commission focused on commission staff sizes per capita 40 and found Minnesota ranked 48th of the 50 states plus the 30 District of Columbia. The Commission's Full-Time 20 Equivalent (FTE), currently at 41, has been stable over the 10 last several years in spite of the general increase in filings. 0 Staff Size FY96 FY97 FY98 FY99 FYOO FY01 FY02 FY03 FY04 PUC FTE Information Technology: Information management is a critical function for the agency. The Commission must be able to capture, analyze, publish and manage a huge volume of information in order perform its duties successfully. Presently, most of this is done on paper. However, the Commission has worked jointly with the Minnesota Department of Commerce (DOC) to implement technology that allows much greater electronic access by DOC and PUC employees to critical documents filed with the Commission. Moreover, the Commission and DOC are very near being able to offer external stakeholders enhanced electronic access to all filed documents. Telephone Assistance Program (TAP): TAP subsidizes phone service for low-income households. TAP is funded by a surcharge, set by the Commission, on wire-line telephone access lines. The Commission also approves expenditures from the. fund which support the credits to eligible subscribers. The Commission's goal is to keep revenues closely aligned with anticipated expenditures. Recent statutory changes have increased the number of potentially eligible households and, as a result, the number of program subscribers. Program adjustments to reflect the statutory changes are being considered by the Commission. Telephone Assistance Program \ 2500 :: =--., \ 2000 \ -- ::...-- ~ \ / \/ sssg s979s r TAP Credits ($000s) TAP Revenues ($000s) 6

8 Minnesota Public Utilities Coinrnission January 18, 2005 Marshall Johnson Ken Nickolai Commissioner LeRoy Koppendrayer Chairman Phyllis Reha Thomas Pugh Commissioner Ronnie Slager Executive 2 Mani Heu OAS Principal Burl Haar Executive Secreta : Ken Kohnstamm : ,. Assistant Attorney~ Brian Sande : General ; I Kari Zipko..., Mary Swoboda OAS Intermediate Mary Jo J asicki Business Manager f i /! Karen Rozeske OSSI &Acct. Officer Jessie Schmoke OAS Senior Amy Rodd OAS Intermediate Deborah Motz Supervisor Consumer Affai Tracy Smetana Mediator2 Kate Kahlert Mediator l Janet Gonzalez Mark Oberlande Carol Casebolt Supervisor Supervisor Supervisor Energy Telecom Legal Unit Stuart Mitchell Marc Fournier Peter Brown Rate Analyst 4 Rate Analyst 4 Attorney2 David Jacobson Ganesh Krishna Eric Witte Rate Analyst 4 Rate Analyst 4 Attorney2 Susan Mackenzi Lillian Brion Ann Pollack Rate Analyst 4 Rate Analyst 4 Attorney2 Robert Harding Kevin O'Grady Rate Analyst 4 Rate Analyst 4 Clark Kam! Rate Analyst 4 Louis Sickmann Financial Analys 4 Jerry Dasinger Financial Analys 3 Bret Eknes Rate Analyst 3 John Lindell Financial Analys 3 Roger Moy Rate Analyst 2 Vacancy Rate Analyst 2 Mary Reid OAS Principal Al Bierbaum Engineer2 Robin Benson OAS Senior 7

9 NERG,Y Major Act;ivitiies in 2004 Energy Policy Objecl;ive: Assuring safe and reliable gas and elect;ric services al; reasonable rares Regional and National Activities Midwest Independent System Operator (MISO) -Advisory Committee member representing the OMS - Commissioner Nickolai Organization ofmiso States (OMS) - Board member and Secretary Commissioner Nickolai (Secretary) Committee for the Midwest Renewable Energy Tracking System - Commissioner Reha Electric Policy Research Institute - Board member - Commissioner Reha National Council on Electricity Policy - Commissioner Reha. Nuclear Waste Strategy Coalition - Commissioner Koppendrayer (Chair) Gas Technology Institute - Advisory Committee member - Commissioner Johnson Rate Cases Xcel Gas pending [Xcel requesting a $9.9 million, or 1/7%, increase] Greater Minnesota Gas pending [No increase requested; establishing base rates] CenterPoint Energy Gas pending [CPE requesting a $21.8 million, or i.8%, increase] Great Plains Gas pending [GPG requesting a $L4 million, or 4%, increase] Interstate Electric final order issued July 1, 2004 [ISP requested a $4.9 million, or 8%, increase; Commission approved a $593,000, or 1 % increase] Planning Functions Interstate Resource Plan final order issued, December 17, 2004 [deficit anticipated in 2008] Xcel Resource Plan pending [deficit anticipated starting in 2011, growing to 1, 830 MWs by 2015 and 3,100 MWs by 2019] Dairyland Power Resource Plan pending [deficit anticipated in 2008] Minnesota Power Resource Plan pending [deficit anticipated in 2009] GRE Resource Plan final order issued, April 26, 2004 [deficit anticipated in 2007] Southern Minnesota Municipal Power Agency Resource Plan final order issued, April 8, 2004 [deficit anticipated in 2008] Statewide transmission planning, [No facilities seeking approval] 8

10 Certificate of Need Calpine [certificate granted for 325 MW of wholesale power out of a combined cycle, gas generator with a capacity of approximately 650 MW. The balance of the capacity is covered by a power purchase agreement obtained through competitive bidding by Xcel] Xcel Blue Lake generator [certificate granted for 320 MW simple cycle gas generator] Trimont Wind [certificate granted for 100 MW wind energy conversion system] Hutchinson Gas pipeline [certificate granted for 89 mile natural gas pipeline between Trimont and Hutchinson for City of Hutchinson] Xcel SW Mn transmission lines [certificates granted for four high-voltage transmission lines in southwestern Minnesota] Xcel nuclear storage facility for the Monticello plant pending. [Xcel requesting authority for up to 30 dry cask containers] Investigations CenterPoint Energy Cold Weather Rule Implementation, pending (109 disconnects pending as of 2/1/05 - Office of Attorney General to attempt to follow-up with affected households] Electric Fuel Clause pending Renewable Energy Objectives Order issued, August 13, 2004 [Appeal pending at Minnesota Court of Appeals] OTP hotline pending Distributed Generation Standards final order issued, September 28, 2004 Aquila financial effects on PNG/NMU monitoring service quality Xcel - Resource Acqµisitions Velva Wind PPA final order issued, December 29, 2004 [12 MW of wind generation] Invenergy PPA pending [375 MW simple cycle gas peaking plant] Itasca PPA pending [10 to 20 MW of biomass generation; contract terms being reviewed by parties] Ivanhoe Wind PP A final order issued, October 4, 2004 [150 MW of wind generation] Xcel NRG financial effects on NSP pending [on-going monitoring] Renewable Development Fund d cycle, pending [on February 3, 2005 agenda] Refund for Gas meter errors pending TOU cost recovery pending Audit of service quality records pending [settlement reached, March 10, 2004; ongoing reporting and monitoring] Special rate riders Renewable energy rider State energy policy rider Emissions Reduction rider Renewable Cost Adjustment Capital structure

11 Service Area Disputes_ Buffalo/Wright-Hennepin Service area disput.e pending Grand Rapids/Lake Country pending Red River/Moorhead, pending Buffalo/Wright-Hennepin, pending Hawley/Wild Rice, pending Two Harbors, Coop L & P, pending Pending Litigation Environmental coalition appeal of Renewable Energy Objectives order, Mn Ct. of Appeals Xcel tax benefits stemming from NRG, Mn Ct. of Appeals Hutchinson Gas Pipeline Mn Ct. of Appeals Complaints NAWO/SOUL v. MP re: Arrowhead Transmission Line final order issued, Sept. 24, 2004 [complaint denied] Energy CENTS v. Beltrami Coop pending. Most recent order issued, January 25, [further compliance requirements imposed] Periodic Energy Industry Reports Service Quality reports Annual automatic adjustment reports/true-up Rulemakings Certificate of Need procedural rules

12 Telecommunications Major Activities in 2004 Telecommunicaliions Policy Objecliive: G,uiding lihe liransiliion lio eff ecliive compeliiliion in lielecommunicaliions markelis Pending Litigation Involving Telecommunications New Access v Qwest, Federal District Court - Oral Arguments completed, waiting for Court decision. 271 Pricing True-up, Federal District Court - 8tli US Circuit Court of Appeals - Case is at briefing stage. Qwest Carrier to carrier Q of S, Mn Supreme Ct. - Oral Arguments completed, waiting for Court decision. Qwest Carr. To Carr. Q of S Report, th US Circuit Court of Appeals - Qwest has agreed to dismiss case. Vonage , gth US Circuit Court of Appeals. - Court "dismissed appeal" - MPUC has now appealed FCC order Court relied upon. Qwest unfiled agreements, gth US Circuit Court of Appeals - Case is in briefing stage. Qwest Reciprocal Compensation, gth US Circuit Court of Appeals - Case is in briefing stage. ATT/Qwest arbitration, Federal District Court - Oral arguments completed, waiting for Court decision. ATT UNE-P complaint, Federal District Court - case dormant Eschelon collocation & DMOQ complnt v Qwest, Federal District Court - case is in the briefing stage. Regional and National Activities Triennial Review, ; ; Waiting for FCC to issue written order. Comments on Voice over Internet Protocol proposed rulemaking.- Waiting for FCC to issue written order Regional Oversight Committee - Commissioner Pugh Access Charge Reform Special Access PUC is seeking additional comments in both cases. Switched access , Further PUC meetings likely in May

13 Commercial Agreements Qwest/MCI, , Currently waiting for FCC to issue order Qwest/Preferred Long Distance, establishing federal guidelines for these Qwest/Granite Telecom, cases. Qwest/Choice-Tel, Qwest/New Access, nterconnection Agreements - Arbitrations Qwest/Covad, PUC decided issues on January 27, Final agreement due in March KM:C/Sprint, Case suspended while companies discuss settlement. MILEC-Qwest Wireless, PUC approved settlement in October Complaints Mn Telecom Alliance v Qwest, ALJ to conduct evidentiary hearing in Feb Velocityv Qwest PUC Approved settlement in August 2004 DeskTop v Qwest Case is currently in Federal Court New Access v Qwest, Eschelon (collocation) v Qwest, Local Number Portability Sioux Valley Company must implement LNP by December 31, 2005 Interstate Company must implement LNP by December 31, 2005 Winnebago Company must implement LNP by April 6, 2005 Citizen's LNP was installed in November 2004 Investigations McLeod rule violations, DOC currently investigating and will file comments with the PUC in the near future. OneStar Disconnections, , , , , Disconnection is still pending. Company is currently under the protection of Bankruptcy Court. Qwest Retail Quality of Service, Ongoing PUC monitoring of quality of service provic:led to retail residential and business customers in Minnesota. Carrier to carrier Q of S, Ongoing PUC monitoring of quality of service provided to other wholesale telecommunication company customers in Minnesota. Tofte Service request, oo Evidentiary hearing have been completed, ALJ Report expected in March 2005, with PUC consideration in 2nd quarter Minnesota Performance Assurance Plan, LTPA ( ); Audit ( ); Tier II Monday ( ). - MPUC receives and monitors ongoing service quality reports. Unbundled Network Elements - Rates MPUC approved settlement regarding rates in August

14 Eligible Telephone Company Designat;ions -- VCI, Parties to submit further comments for PUC consideration later in Midwest Wireless, MPUC approval is currently being considered by the FCC. Hickory Tech (Mn Southern) Wireless, Parties to submit further comments for PUC consideration later in WETEC, MPUC approved company request to draw federal funds in Sept RCC Mn and Wireless All MPUC approved company request to draw federal funds in April Telephone Assistiance Program Program Changes - Federal program and guidelines changed in MPUC convened multiagency task force to recommend changes in Minnesota program. MPUC will consider changes in Minnesota program in first quarter of Operatiing Autihoritiy for Citiies City of Windom Windom granted authority to provide telephone service in order dated January 13, Extiended Area Service KilKenny/Metro, MPUC decision on rates for voting in May Winsted, EAS to Metro to be implemented on February 10, Clearbrook-Gonvick, EAS request denied in Order dated September 20, Northfield, AFOR Sprint revised, Monitoring ongoing quality of service performance. Frontier revised, Monitoring ongoing quality of service performance. 13

15 ST A TE OF MINNESOTA PUBLIC UTILITIES COMMISSION 121 7TH PLACE EAST SUITE 350 SAINT PAUL, MINNESOTA ATE.MN.US